6/29/2009 @ 2:30PM

Ricci Vs. DeStefano

Monday’s decision of the United States Supreme Court in the New Haven Firefighter’s affirmative action case, Ricci v. DeStefano reveals an open wound on affirmative action by public bodies that time has not healed. As a technical matter, the case arose in a somewhat unusual posture, so I will take the liberty of writing a longer piece than normal. Apologies in advance.

The city of New Haven went to great lengths to devise a written examination that would fairly test members of the New Haven firefighters for promotion to captain and lieutenant. But ultimately, the results on this test, like the results on so many other qualification tests, generated a sharp disparate impact. African-American and Hispanic applicants did far worse than the white candidates for the open positions, such that none of them would have been eligible for consideration in the first wave of promotions. Black and Hispanic applicants threatened to sue the city to invalidate the test because of that disparate impact. The city decided, in effect, to settle that case without litigation by abandoning its tests and refusing to certify any successful candidates for promotion.

That decision did not bring peace. The disappointed white firefighters then went to court themselves, claiming that the city had no reason to set aside the test, which had been fairly vetted and properly administered. The Supreme Court, by a predictable five to four vote that broke along conservative and liberal lines, upheld the validity of the test. Justice Kennedy wrote the Court’s opinion, and Justices Scalia and Alito concurred. Justice Ginsburg wrote a dissent

I have little doubt that under the current law, the conservative majority got this case correct under Title VII. The relevant legal analysis calls for a three-step test. The first, and uncontroversial, conclusion was that the African-American and Hispanic firefighters could show that the test had a disparate impact. That finding, however, does not end the matter, but only shifts the burden to the city to defend the test on the ground of “business necessity,” by which is meant that it was a device that the city had to use in order to sort out those firefighters who were properly eligible for promotion from those who were not. On this score, the city did well. The test preparations were meticulous, and if the elaborate precautions taken to root out all potential forms of bias were insufficient, then the business necessity defense was a dead letter.

So this moved the question to the third stage, which is whether there was some alternative means that could have achieved the same result without the discriminatory impact. Again, the only way to make this case out would be to claim that all these tests, no matter how constructed, are not job-related so that promotions should turn on subjective intangibles. The frequency with which tests are used in all areas of life (including many employment contexts, like professional sports, where there is no disparate impact problem) suggests the foolishness of this approach.

Government bodies and private employers both need reliable information in order to make intelligent decisions on promotion, and it would be a scandal if Title VII were to remove one core component of any employment decisions. If the disappointed applicants could have proposed their own alternative test, that would have had both predictive power and no disparate impact, there is room for a discussion on the point. But one of the least appealing features of the current law on testing in race cases is that the attackers of the result do not have to present that alternative. And it is not likely, given the long history of failed attempts, that they would be able to do so. The defenders of affirmative action do us no favor when they attack the validity of tests that are now so carefully engineered that major improvements seem unlikely.

The dissent of Justice Ginsburg did not answer the majority’s case, but instead focused its attention on two diversions from the main issue. The first was its dutiful recitation of the past injustices in hiring firefighters in New Haven, dating back over 30 years. It was just that history of evasion that spawned the creation of the disparate impact test in Duke Power v. Griggs decided in 1971. The argument was that intentional discrimination was difficult to ferret out, so that objective evidence of a racial skew was needed to guard against underhanded schemes.

Even in 1971, that outcome had its real cost, because it invalidated sensible tests that were not smokescreens for discrimination. Indeed, the height of folly on this point was Justice Brennan’s 1982 decision in Teal v. Connecticut that showed the bad judgment to invalidate an employment test that was adopted by a state that already had committed itself to an affirmative action program. No smokescreen there. The regrettable effect of Teal was to advance the position of less qualified black applicants over more qualified black applicants, which is hardly what we should hope to see from a law dedicated to eradicating discrimination. The history does not matter. Looking forward is what counts.

Justice Ginsburg’s second line of defense fares no better. She thought that the operative question was whether New Haven had “good cause” to invalidate the test. Normally, that is an appropriate test for settlement, but in this case the city had duties to all its employees, and the record showed quite clearly that the decision was made in response to inordinate political pressures, not because of any real concern with the test itself. So this ground should fail as well.

So the Court’s decision looks to be correct under the current law, and yet it should also give rise to a sense of deep disquiet. Clearly, there has to be a better way to handle the question. The root of the difficulty lies, in my view, in the fact that we have a Title VII in the first place. On clear libertarian grounds, I have long argued that repeal of Title VII is the appropriate way to treat private markets. Firms that want to practice affirmative action should be able to do so, and no firm should ever be put under the disparate impact microscope, with its futile insistence on perfection with testing results. It will be said that some private firms will resort to their old ways, which is a possibility but a remote one. The change in composition of the workforce is an accomplished fact. These changes are readily observable at the senior management levels. Any large corporation that goes back to old-line segregation policies will commit economic suicide. We have to trust the rationality of private employers or be stuck with the irrationality of government regulators in their oversight position.

The benefits of repealing Title VII would be enormous. The liberalization on both sides of the market would reduce litigation, decentralize decision making, and take some of the political heat out of the process. We did not see a transition provision to overcome the evils of state-imposed segregation, but it is a mistake to keep beating on the history when all the past players are long dead and gone.

If private sector issues have a clear resolution, public sector issues do not. Dealing with public employment is always an issue because the state is never a free agent when it relates to its citizenry. In the end, the best we can hope for is a regime that allows public entities the same play in the joint on affirmative action that similarly situated private companies would adopt for themselves. That suggests a position midway between the Court and the dissent. It recognizes that these tests are valid for the purposes for which they are intended, but that other factors have to be brought back into the mix, including community acceptance that allows public bodies to work well.

In the end, we can’t win with either the rigidity of the conservative position or the historical guilt trip of the liberal. A little flexibility will go a long way. The government as a manager cannot be held to the same strict standards that are applicable to the government as a regulator. The libertarian therefore becomes a moderate. He would keep the tests, and allow New Haven to promote the top of the African-American group to the prejudice of some white candidates. These rules should be announced in advance and after public deliberation. If you are happy with this solution, you don’t understand the problem. If you are unhappy with it, come up with a better alternative.

Richard A. Epstein is the James Parker Hall distinguished service professor of law at the University of Chicago, and the Peter and Kirsten Bedford senior fellow, the Hoover Institution. He is also a visiting professor at New York University Law School. He writes a weekly column for Forbes.com.